Trade cautiously amid Omicron scare

The stock markets continued to rally in the period under review of 30th December to 5th January and gained on four of the five trading days. They were flat on the first day of the period which was expiry day for December futures. BSE Sensex gained a massive 2,416.66 points or 4.01 per cent to close at 60,223.15 points while Nifty gained 711.65 points or 3.97 per cent to close at 17,925.25 points.

December futures expired on Thursday (December 30) and it was one of the quietest expiries witnessed in a very long time. The net change for the day was a mere 10 points and the range between the high and low of the day was 118 points. The series expired with losses of 332.30 points or 1.89 per cent at 17,203.95 points.

If one looks at the performance of Indian benchmark indices in calendar year 2021, they were better than the Dow and outperformed it. BSE Sensex gained 10,502.49 points or 21.99 per cent to close at 58,253.82 points. Nifty gained 3,372.30 points or 24.12 per cent to close at 17,354.05 points. Bank Nifty was comparatively an underperformer and gained 4,217.65 points or 13.49 per cent to close at 35,481.7 points. BSE midcap gained 7,028.65 points or 39.18 per cent to close at 24,970.08 points. BSE smallcap was the outperformer gaining 11,359.65 points or 62.77 per cent to close at 29,457.79 points.

In primary market news, Shares of CMS Info System Limited listed on the last trading day of the calendar year. The company had allotted shares at Rs 216, saw its shares close day one at Rs 237.40, a gain of Rs 21.40 or 9.91 per cent. They gained marginally thereafter to close at Rs 239.60, a gain of Rs 24.60 or 11.38 per cent.

The calendar year saw 65 issues list on the main board and a sum of Rs1.35 lakh crores was raised through these issues. About 80 per cent of the amount raised was through offer for sale. It's been a great year for Private Equity investors and one hopes that if they keep a control on their greed and price issues reasonably leaving something on the table for investors, the party would continue. Readers would be aware that the rules for leveraged HNIs are undergoing a big change from April 1, 2022, when they would be eligible to borrow just Rs1 crore per person. This would affect subscriptions of IPO's and the role of pricing would become a key factor in selling the issue.

The new variant Omicron is seeing a huge surge in the number of patients and the US recorded over a million cases over the last two days each. The number is huge and even India has recoded a spurt in the number of cases in the recent week. New restrictions on flights have been imposed globally and also in India. In India, vaccination for people in the age group 15-18 has begun.

The rally in the markets has happened on the back of FII's turning positive and buying over the last three days consecutively. This has changed the sentiment. Incidentally Dow Jones has also had a good showing and the index hit a new lifetime high of 36,935 points.

Coming to the markets in the period 6th January to 12th January, should see markets trying to move up further but with a much slower pace. Further, post this sharp rally in the previous week, there would be corrections as well. Just today, Hong Kong has banned flights from eight countries including India, US and UK. In the coming days with the rapid rise in cases, many more restrictions are expected. Keeping this fact in mind, investors should continue trading in the markets which have seen much more breadth with a large number of stocks participating in the rally. As mentioned earlier, corrections would be a part of the future movement and should be expected.

Trade cautiously and keep a lookout for corrections and updates on the Covid variant as it impacts society at large.